Wednesday, October 4, 2023
HomeTax PlanningTop 4 Common Reasons the IRS Will Audit You

Top 4 Common Reasons the IRS Will Audit You

An IRS audit is simply the IRS double-checking your date to ensure you don’t have any discrepancies in your return. If you have already filed your taxes for this year, cross your fingers that none of the following applies to your return.

If you have not, you still have a few days to minimize your chances to be selected for an audit by the IRS. Now there is also an option to speak with a tax expert or CPA online via TurboTax Live, and you can do so without needing to leave your home in Cleveland, Los Angeles, New York, or anywhere else in the United States.

Top 4 Reasons the IRS Will Audit You

The following is a list of the four common reasons for IRS Audits.

  • Data Entry Error
  • Claiming Too Many Charitable Donations
  • Claiming Non-Existent Dependents
  • Unreported Income

1. Data Entry Error

Making data entry errors is a common reason for tax audits. Taxpayers tend to, unintentionally or intentionally, leave out or input wrong information. A tax audit can be triggered by something as simple as misspelling your own name or entering your social security number incorrectly.

It is important to make sure that your name, social security number, and bank account numbers are written correctly on all forms before submitting anything. Mistakes happen, but make sure you double- and triple-check your numbers if you’re doing your own taxes. You’ll be hit with fines regardless of whether your mistake was intentional or unintentional.

2. Claiming Too Many Charitable Donations

If you have made contributions to a charity of some sort, you are eligible for deductions. However, if you are reporting false donations, this can result in tax audits. If you do not have the proper documentation to prove the validity of your contribution, do not claim it. Claiming $20,000 in charitable deductions on your $60,000 salary is likely to raise some red flags.

3. Claiming Non-Existent Dependents

Claiming children you don’t have is a time-honored scam attempt to try to minimize one’s taxes. Or, in some cases, it may genuinely be an honest mistake. Split households tend to claim dependent children on both returns even though they are no longer filing jointly. The IRS will notice this and audit you for it. Follow the IRS guidelines for deciding whether or not someone is your dependent.

4. Unreported Income

It is very tempting for taxpayers to leave out a few dollars from their total and decrease their taxable income. However, beware, because the IRS receives copies of the same income reporting forms you do, from copies of your W-2 to Form 1099. So, leaving out or changing any information, in regards to your income, isn’t a good idea.

Also, leaving out wages, self-employment income, bonuses, and other income contributes to your audit risk. Be truthful to a fault and report your full income on your return.

If you’ve been audited by the IRS, it is important to contact a team of tax professionals. With an experienced, and licensed professional on your side, you can get through the audit stress-free. However, it is important to note that all tax professionals have an IRS audit representation fee!

FinanceGABhttps://www.financegab.com/
Ajeet Sharma, the founder of Financegab and a well-known name in the field of financial blogging. Blogging since 2017, he has the expertise and excellent knowledge about personal finance. Financegab is all about personal finance which aims to create awareness among people about personal finance and help them to make smart, well-informed financial decisions.

RECENT POSTS

Most Popular